Regardless of the type of startup you’re planning to build, it would involve the law. You could either look at the law as a burden or as a tool you could leverage to boost your business goals. That said, spare yourself some grief by steering clear of the most common legal mistakes startups make:
Not Having a Business Structure
When you establish a corporate structure for your startup, whether a limited liability company, S-Corp, a limited or general partnership, or any type of special entity, you could save your personal property from potential liabilities that your business might incur, reduce tax liabilities, and make the most of the benefits the law affords you.
Having Undefined Responsibilities and Roles
You and all your co-founders should have a written shareholder or partnership agreement that clearly states what your respective obligations, rights, and roles are in the startup.
Not Having an Exit Plan
The reality is that you could grow apart from your partners or want different goals and visions for your business in the future. Miller & Steiert, P.C. and other renowned business lawyers in Denver noted that you should know when and how you could sell your shares, how much shares should be worth, and who could purchase interest. Make sure to have your lawyer draft buy and sell agreements that address issues like these to ensure smooth transitions later on.
Not Having a Plan for Intellectual Property Matters
Before investing all your resources on your big ideas, you have to ensure that you’re not infringing on another individual’s intellectual property. Your lawyer must perform thorough searches to make certain that your IP, including your branding, doesn’t expose your business to infringement claims. In addition, make sure to safeguard your own intellectual property.
DIY-ing Your Legal Issues
Trying to save money by getting all your legal stuff done DIY could end up costing you more in the long run. Merely filling ready-made forms that do not specifically address your business’ issues, goals, and needs could leave you open to legal issues that an experienced business lawyer could’ve helped you avoid in the first place.
Legal matters are often overlooked because of the excitement of building a startup, but they shouldn’t be if you want your startup to succeed. Remember that just because your business is still starting out, it does not mean that people will let you get away with legal issues.